jueves, 15 de diciembre de 2011

fin24

Euro bounces from 11-month low

Dec 15 2011 18:40
 
New York - The euro bounced from an 11-month low against the dollar on Thursday as a successful Spanish debt auction and strong U.S. data whetted risk appetite, a trend some say may prove fleeting.
The euro jumped to a global session high of $1.3049 after data showed new applications for U.S. unemployment insurance fell to a 3-1/2 year low, suggesting the job market’s recovery was gaining speed. Solid U.S. manufacturing data and a rise in factory activity in the Mid-Atlantic to its highest since April increased investors’ appetite for riskier assets.

The deluge of U.S. data offered further proof of increased momentum in the pace of economic activity and provided a stark contrast to Europe, where the festering debt crisis has already pushed some economies into recession.

Indeed, while flash euro-zone PMI surveys on Thursday showed the decline in the private sector eased a little this month, a recession still looks inevitable with the region’s periphery struggling badly.
The common currency drew some comfort from a successful Spanish bond auction . The Spanish sale came a day after another auction where Italy had to pay a hefty 6.47 percent to borrow over the same period.
Generally quiet markets gave investors an excuse to book some profits on the single currency’s drop of about 3 percent against the greenback this week, according to Omer Esiner, chief market analyst at Commonwealth Foreign Exchange in Washington.
“While additional near-term upside for the euro is likely to result from continued profit taking and positioning, its medium-term downtrend remains firmly intact,” he said. “Euro losses are likely to accelerate in the event of a mass downgrade of euro- zone states by credit rating agencies, a scenario that looks increasingly likely, given the lack of progress at last week’s EU summit.”

The euro was last up 0.2 percent against the dollar at $1.3008, taking a breather from a massive sell-off earlier this week that saw it drop to $1.2945 on Wednesday, the lowest level since Jan. 11, on trading platform EBS. The next major support is at the year’s low, $1.2860, hit on Jan. 10.
The single currency, meanwhile , fell against the Swiss franc after the Swiss National Bank kept its floor on the euro/franc exchange rate unchanged at 1.20 francs. That disappointed some investors who had built long euro positions on expectations that the SNB would lift the floor to fight deflation in Switzerland.
The euro last traded down 0.9 percent at 1.2264 Swiss francs while the dollar traded 1.2 percent lower against the franc at 0.9414 francs.
The single currency has lost about 3 percent against the dollar this week after last Friday’s European Union summit, seen as crucial to reining in the debt crisis, failed to come up with near-term solutions to restore investor confidence.
“Overall, the outlook for the euro remains dark, with the unraveling of the treaty last week, refusal to lend to the IMF and the overall downside risks to global growth,” said Paul Robson, currency strategist at RBS Global Banking. “We expect the euro to fall to $1.26 by the end of Q1 next year.”
The euro’s weakness, plus sharp drops in the prices of commodities such as gold and persistent strains in dollar funding markets, have helped lift the dollar index close to its 2011 high. The index was last down 0.2 percent at 80.416 as investors booked profits on long dollar positions.
The euro remains highly vulnerable as the risk of sovereign downgrades also looms large for the region and investors fear some member states may develop cold feet with regard to the proposals on tighter fiscal rules that were the centerpiece of last week’s summit.
Against the yen, the dollar, meanwhile, eased 0.3 percent to 77.84 yen.

This is money

'Cheaper to rent than buy in 47 out of 50 British towns'

By Andrew Oxlade  14th December 2011

Renting a home is cheaper than buying in just three of Britain's 50 biggest towns and cities, according to a new study.
The findings highlight the stark injustice and worsening situation for millions of people priced out of the property market.
A year ago, it was only cheaper to buy in 40 out of 50 towns.
As the banking industry, rocked by the financial crisis, has tightened lending criteria on mortgages and demanded bigger deposits, it has left many more would-be first-time buyers stuck on the sidelines.
This has forced many more people to rent rather than buy, and spurred landlords to cash in on the rising demand and charge tenants more.
Average rents have been on the rise for most of 2010 and 2011.
Meanwhile the UK bank rate has been pinned down to 0.5 per cent for nearly three years, keeping mortgage repayments exceptionally cheap for those already on the property ladder.
Swansea, Plymouth and Bournemouth are the only three locations included in the study where renting works out cheaper than buying a property, according to the study by property website Zoopla.
Milton Keynes was named as the place where buying a home was the most cost-effective compared with renting, with renting being 36% more expensive than owning, leaving renters typically £2,436 a year worse off. In London, renting is 31% more expensive than the cost of ownership, leaving renters paying £6,888 annually on average compared with owners.
Nicholas Leeming, business development director at Zoopla.co.uk, said: 'The shortage of financing, especially for first-time buyers, has pushed demand for rental property through the roof.
'But for those lucky enough to be in a position to get a mortgage, there may never be a better time to buy.'
However, any rise in interest rates or a fully-blown second credit crunch  could rapidly and dramatically alter the affordability of UK property, sending mortgage repayments soaring for new borrowers in particular.
Markets currently predict no rise in the UK base rate until 2015 but the best rates on mortgage trackers have risen in recent months in reaction to the worsening situation in the eurozone, which threatens another banking crisis.
Britain's record low interest rates has been largely only of benefit to those already sitting on substantial amounts of equity in their homes and therefore able to offer up the typical 25 per cent to 40 per cent deposits needed to get the best deals when remortgaging.
For some, they have enjoyed dirt-cheap credit even without substantial equity. If they took one of the overly generous deals on offer in the credit boom - mortgages that track the base rate with only a slim premium were not uncommon - they might today still be paying between 0.5 per cent and 1.0 per cent.
And those who borrowed from Nationwide Building Society before the spring of 2009 continue to benefit from the lender's pledge to only charge 2 per cent above base rate, leaving hundreds of thousands of borrowers paying just 2.5 per cent.
Nationwide's standard variable rate for customers who have joined it since then is 3.99 per cent.
Zoopla based its research on buying a two-bedroom flat paying a rate of 5 per cent but taking an 'interest-only' deal, which is significantly cheaper than a 'repayment deal', and offering no deposit. It says these were the best assumptions to give a fair comparison for the real cost of finance.

The Register

Facebook won't deny it is sitting on huge mountain of cash

Facebook has declined to comment on a report that suggested the dominant social network had already tucked away sales of $2.5bn for the first nine months of 2011.
Gawker, citing a "well-placed" source, claimed to have its hands on juicy financial details about the privately-held company that is expected to go public next year.
A Facebook spokeswoman told The Register "No comment, as it relates to revenue."
If the numbers are accurate, then they paint a good picture of just how much money CEO and co-founder Mark Zuckerberg is sitting on right about now.
Here's Gawker's breakdown for the period covering January 2011 to September 2011:
Assets: $5.6 billion
Cash/cash equivalents: $3.5bn
Debt: $0
Shareholder equity: $4.5bn
Operating cashflow: $1bn
Revenue: $2.5bn
Operating income: $1.2bn
Net income: $714m
The same report echoed earlier suggestions that Facebook was looking to raise $10bn at a $100bn valuation in an initial public offering.
That private treasure trove, again if correct, is impressive. But some observers had estimated that Facebook could hit revenue of $4bn for 2011, a goal that may have now been missed, unless - that is - the company manages to pull in sales of $1.5bn during its final quarter.
Another interesting nugget apparently leaked by the anonymous source to Gawker appears to reveal exactly how Facebook's ownership is currently carved up.
Zuckerberg owns 24 per cent of the network he helped build from his college dorm in Harvard.
Among others, Facebook employees have a 30 per cent slice of the pie, serial Web2.0 investor Digital Sky Technologies owns 10 per cent, and Microsoft has 1.3 per cent ownership of the network.
Earlier today, the company debuted a major makeover of Facebook by introducing its Timeline feature. The network certainly appears to be priming itself for a very public showtime in 2012

EUbusiness

Spain demands EU compensation in fishing row

15 December 2011, 16:41 CET

(BRUSSELS) - Spain said Thursday it will ask for compensation from the EU after the European Parliament cancelled a deal giving its trawlers special access to fish in Moroccan waters.
"I am going to ask for compensation for the damage to Spain's fishing fleet," said Spain's Farm, Environment and Fisheries Minister Rosa Aguilar, who was in Brussels for talks.
The lawmakers blocked the extension by 12 months of controversial special access for EU fishermen to Moroccan waters, until the interests of disputed Western Sahara are taken on board.
Opponents of the deal, which had mainly benefitted Spanish fishermen, have long argued that Morocco has no claim to waters off the disputed region and that aid to Morocco does not find its way to Western Saharans.
Morocco annexed Western Sahara in 1976 after a Spanish withdrawal, and Polisario fighters took up arms for an independent state.
The UN brokered a ceasefire in 1991 but a promised self-determination referendum has never been held.
The blockage of the deal, which provided for annual payments to Rabat, prompted the North African nation to immediately ban all European fishing boats.
"We will defend our fleet and the men now without work," said Aguilar.
She said all Spanish fishing boats had headed back to port to comply with the ban. "This is going to cause major harm to the Spanish fleet, which is mainly from Andalucia and the Canaries," she told reporters.
"We are talking about a fleet of about 70 boats and more than 500 direct jobs that will be affected."
The motion in parliament, passed by 326 votes to 296, was taken on the eve of talks between European Union fisheries ministers in Brussels, set to agree quotas for the Atlantic, North and Baltic Seas as well as the Mediterranean.
The EU's 27 states had agreed in July to extend an agreement allowing their boats to fish more off Morocco in exchange for funding, which campaigners say breaches international law regarding the people of Western Sahara.
Under the deal, Morocco would have received 36.1 million euros ($46 million) to let some 120 fishing boats, mainly from Spain, operate in its waters.
Finnish liberal MEP Carl Haglund said that payments already made were "a waste of taxpayers' funds" with no environmental benefit and no economic impact either to the EU or Morocco.
"Financial support for the development of local fisheries must be used properly and more efficiently while monitoring of where the money goes must be improved," the parliament said.
MEPs also "called on the Commission to ensure that a new protocol fully respects international law and benefits all affected local populations, including the Sahrawi people," a parliament statement said.
Spain's Aguilar said "I respect the decision but I'm not supporting it."
"I am going to ask for negotiations to be started up again," she added as she went into talks with counterparts.
Morocco's fisheries minister, Aziz Akhannouch, said in a statement on Thursday that the EU parliament's move had "very negative consequences for the relationship between the EU and Morocco".
But he added that "rather than a threat looming over the industry, this is an opportunity," according to news agency MAP.
"We have our own means of developing the sector. We have a lot of professionals who want to fish this resource and develop it to benefit Morocco."

Hong Kong Finances

HK checks on China’s Support Measures

Hong October 31, 2011 • 11:19 pm

Kong’s Financial Secretary John Tsang has concluded his trip to Beijing. As a result of the visit, he has confirmed that he had held solid discussions with relevant bodies in Mainland China to follow up on the policies and measures set out by Vice Premier Li Keqiang in August 2011. The measures are aimed at supporting Hong Kong’s development.
A large number of the measures are related to the financial sphere, which reflects the support of the Chinese government to strengthen the position of Hong Kong as an international financial centre, by expanding the cross-boundary use of the renminbi (RMB). According to Tsang, all Chinese bureaus and departments have been actively studying the Vice Premier’s policies, and they are expected to be implemented soon.
During Tsang’s meeting with China Securities Regulatory Commission Chairman, Shang Fulin, both parties discussed the progress in launching a Hong Kong exchange-traded fund (ETF) on the Mainland market. The Commission has entered the final stage of establishing ETF trading methods and management, so Tsang hopes that the details will be announced soon.
Tsang confirmed that China was finalizing the technical details of how to allow investments in the Mainland’s equity market by means of the RMB Qualified Foreign Institutional Investor scheme. He noted that he had received positive feedback from the State Council’s State-owned Assets Supervision & Administration Commission on the encouraging of state-owned enterprises to set up listed branches in the jurisdiction.
Also, Hong Kong will work closely with the Ministry of Commerce and the People’s Bank of China with a view to ensure smooth implementation of the managing of foreign direct investment from Hong Kong enterprises on the Mainland. To promote the initiative, officials from the Ministry and the Bank will be invited to Hong Kong.

Business World

Ayala firms up road foray 

 December 15, 2011 11:46:13 PM

AYALA CORP. outbid a San Miguel Corp.-led consortium for the contract to build, operate and maintain the 4-kilometer Daang Hari-South Luzon Expressway (SLEx) Link Road, with just a final evaluation left to hurdle before the first public-private partnership (PPP) project under the current government is awarded, officials said on Thursday.

The country’s oldest conglomerate, whose core business lies in real estate, banking and telecommunications, is thus poised to firm up its foray into road infrastructure along with its venture into power generation.
“Ayala [Corp.] submitted the winning bid of P902 million versus South Expressway Link [Consortium’s] P608 million,” Rogelio L. Singson, secretary of the Department of Public Works and Highways (DPWH), said via text.
DPWH Director Rebecca T. Garsuta said separately by phone that the government had set a P371-million floor price, representing reimbursement of its “initial investment” in the project.
South Expressway Link Consortium -- consisting of San Miguel Corp.’s Optimal Infrastructure Development, Inc., Star Infrastructure Development Corp. and CLGP Philippine Holdings, Inc. of the Citra group -- and Ayala had been the only bidders for the PPP deal.
DPWH said in a statement yesterday the notice of award will be issued on Dec. 22, following post-evaluation and qualification of Ayala’s bid.
“If Ayala fails to meet any of the requirements or conditions, it will be post-disqualified [sic] and the [DPWH Special Bids and Awards Committee] will conduct the post-qualification on South Express Link [Consortium],” the department said in its statement.
The Daang Hari-SLEX Link Road is a 4 km, four-lane thoroughfare that will connect Bacoor, Cavite to SLEx near the Susana Heights interchange in Muntinlupa City.
The project, involving a 30-year contract for financing, design, construction, operation and maintenance (O&M), will have an initial toll rate of P17 for Class 1 vehicles (jeepneys, pickup trucks, vans and cars), P34 for Class 2 vehicles (light trucks and buses), and P51 for Class 3 vehicles (trailers and large trucks), both DPWH and Ayala said in their separate releases on Thursday.
This is Ayala’s first toll road project which, the firm said further in its statement, will complement its property projects in Cavite and in Muntinlupa City.
“This is a good initial foray in the transport infrastructure space and we believe this successful experience working within a public-private partnership framework would be helpful in pursuing future projects under the PPP program,” the statement quoted Fernando Zobel de Ayala, Ayala Corp.’s president and chief operating officer, as saying.
“This road project provides significant opportunities for synergies within the Ayala group, especially our real estate group, Ayala Land, Inc., as it cuts travel time to our residential and commercial projects in this rapidly growing part of the metropolis.”
The firm sees the project as a “long-term investment” that will complement other segments of the group, John Eric T. Francia, Ayala Corp.’s managing director, told reporters in a briefing yesterday.
The Daang Hari-SLEX Link Road will pass near Ayala Land’s Avida Settings Cavite, Southvale Solnera, Verdana Homes Mamplasan, Amaia Scapes, and various Ayala malls, among others, Mr. Francia noted.
Ayala said in its statement that it will pursue the project through a partnership with Spanish firm Getinsa, which has experience in toll road projects in Spain, other parts of Europe, Latin America and in Asia.
In his briefing yesterday, Mr. Francia said the firm expects to sign the concession agreement in January, with a detailed design to be drafted within four months afterwards. The government is also expected to complete right-of-way acquisition for the project within six months from signing of the agreement, he added.
“As soon as the government delivers right-of-way acquisitions [sic], Ayala plans to begin construction by July 2012,” Mr. Francia said.
“By the second half of 2013, [the road] will be operational.”
Mr. Francia said the firm expects to invest “north of P2 billion” for the toll road project.
“We have the flexibility of funding [the project] through equity; maybe have the option of taking in bank financing,” Mr. Francia said.
“But there’s a good chance we will use our cash for this.”
Ayala is also looking at other toll roads in the government’s PPP list, he added, such as the P10.6-billion Ninoy Aquino International Airport Expressway and the North Luzon Expressway-SLEx Connector Road, for which Metro Pacific Investments Corp. has submitted a P21-billion unsolicited bid, that could be rolled out in the first quarter of 2012.
Moreover, Ayala Land is eyeing a bid for the Laguindingan Airport O&M deal, Mr. Francia said.
The government last month said it aims to auction off 15 PPP projects next year.
Sought for comment, San Miguel President Ramon S. Ang said via text, “Congratulations to them (Ayala Corp.)”
Ayala Corp. shares closed 1.43% or P4.20 higher at P297 apiece yesterday, while those of San Miguel closed 0.678% or P0.80 higher at P118.80 per share.

China Business News

Kazakhstan’s 3rd gold refinery will have capacity to produce 25/t of bullion per year 

November 13, 2011

Kazakhstan plans to begin construction of a third gold refinery next year to process an expected increase in volumes of the precious metal, the country’s Industry Ministry said on Monday.
State miner Tau-Ken Samruk will run the refinery, which will have capacity to produce 25 tonnes of bullion per year and could cost up to $30 million to build, the ministry’s committee of industry told Reuters in a written reply to questions.
Kazakhstan, Central Asia’s largest economy, has ambitious plans to raise annual gold output to 70 tonnes or more by 2015. It produced 27.5 tonnes of gold in the first nine months of 2011, including 12.5 tonnes of refined gold, official data show.
The central bank has committed to augment its gold reserves and ease exposure to the dollar by purchasing Kazakhstan’s entire bullion output from next year until at least 2014 or 2015.
There are currently two gold refineries in Kazakhstan. One, operated by Glencore-owned miner Kazzinc, refines ingot to international standards. Copper miner Kazakhmys refines gold to meet Kazakhstan’s domestic standards.
The committee said that Tau-Ken Samruk, the mining arm of sovereign wealth fund Samruk-Kazyna, was planning an investment programme to build the refinery and supply all of the necessary raw materials.

Ottawa citizien

Bill Gates won't return to Microsoft


Bill Gates on Thursday ruled out ever returning to the helm of Microsoft while dismissing criticism by late Apple founder Steve Jobs, who he called "brilliant".
Gates, in Sydney for a family holiday, said recent rumours that he was considering a full-time comeback to the US software giant he founded, but stepped back from in 2006, were untrue.
In an interview with the Sydney Morning Herald, he said he was busy working with the Bill & Melinda Gates Foundation "and that will be what I do for the rest of my life".
"I'm part-time involved with Microsoft, including even being in touch this week to give some of my advice, but that's not going to change--the foundation requires all of my energy and we feel we're having a great impact."
The foundation funds health and anti-poverty projects in developing countries, including malaria research and vaccination programmes, and works with the poor in the United States.
Steve Ballmer, who took over from Gates, has been criticised by some for lacking the innovation that Gates brought to the company.
Gates has also faced his share of criticism, with Apple innovator Jobs portraying the Microsoft founder as "basically unimaginative" and an exploiter of other people's ideas in an authorized biography.
Gates maintained a long rivalry with Jobs, who died from cancer in October, and said the Apple boss was hard on Microsoft because "the Microsoft machines outsold his machines by a lot".
"But that's fine, he was a brilliant person," he added to the newspaper.
"Our work at Microsoft was super successful for all good reasons, but Steve made huge contributions and he actually in his last few years was a lot kinder than that. But over the years he did say some tough things."

miércoles, 14 de diciembre de 2011

Business First

Several executive changes made at AEP’s transmission business

Date: Wednesday, December 14, 2011,

American Electric Power Co. Inc. promoted, hired or shifted on the organizational chart, several employees in its transmission business.
American Electric Power Co. Inc.  is shaking up its transmission business.
The Columbus-based power company announced Tuesday that several employees in the division will be promoted, hired or shifted on the organizational chart, effective Jan. 1.
Michael Heyeck , senior vice president of transmission, will act as president of a joint venture between AEP and MidAmerican Energy Holdings Co. 
AEP hired Scott Smith , formerly vice president and assistant to the president of Ohio Valley Electric Corp.  , as its senior vice president of transmission strategy and business operation.
Robert Bradish was promoted from managing director of transmission planning and business development to vice president of grid development.
And Scott Moore , vice president of transmission engineering and project services, now will report directly to Lisa Barton , executive vice president of AEP Transmission.
The organizational changes are designed to help the division focus on “implementing transmission projects in the company’s 11-state footprint, increasing investments to improve transmission infrastructure and continuing to develop joint venture projects outside the company’s service territory,” according to a press release.
“Much of the investment in the transmission system was made decades ago. We believe that now is the time to re-invest in the system to ensure we can continue providing reliable, efficient transmission service to our customers while we pursue transmission growth opportunities inside and outside of AEP’s service territory,” CEO Nicholas Akins said in the release. “This realignment of our transmission business will help us improve the system, advance our leadership in the industry and deliver earnings growth through transmission projects.”

Le Figaro

Americans Remain Worried for the Future of Europe

12/12/2011 | Mise à jour : 15:03

In the eyes of American politicians and members of the press, the fundamental Euro-zone problems won’t be resolved by austerity alone.
There were neither congratulations nor relief in the White House after the EU accord on government reform adopted in Brussels last Friday.
The best that Barack Obama had to say was that the accord showed progress.
Jay Carney, Obama’s spokesman, said that the White House was still waiting for concrete change in Europe.
He wasn’t the only American to say so. Last week, American Treasury Secretary Timothy Geithner urged Europeans to act decisively. He spent three days in Europe on a mission to tell Europe that the summit on December 9th was a “last chance” to restore American confidence in Europe.
If Friday’s summit really was the last chance, then Europe has failed. A survey of the American press quickly showed that confidence was not restored by Friday’s European accord.
American press has little faith in summit
On Friday, it was immediately obvious that the editorial boards of America’s top newspapers had little faith in the summit. In fact, the American press poked fun at the Europeans and their new “groundbreaking” summit.
“The script could have been written in advance—Europe's leaders, meeting amid market turmoil and dire predictions about the consequences of failure, came together in Brussels Thursday night and Friday, and sure enough, they all went home declaring victory,” said an editorial in the Wall Street Journal. 
A New York Times editorial took the same tone. The editorial said that the New York Times had lost count of how many “historic” summits had been celebrated, only to fail shortly thereafter.
The New York Times editorial criticized measure of universal austerity pushed by Germany, saying that austerity could threaten growth. The editorial also said that Europe has still not set aside sufficient bailout funds for Italy and Spain.
“[The accord] still leaves the Euro zone without a lender of last resort, like America’s Federal Reserve, to defend vulnerable countries and banks from market panic,” the daily wrote.
The Washington Post, another American daily that focuses on political coverage, said in an editorial that Europe is still “on the brink.”
“What we have is a promise to make a promise,” the news daily of American’s capital city said.
In another article, the Wall Street Journal said that the summit didn’t go far enough.
“After two years of deepening crisis, it had become apparent to everyone that there could be no solution unless the euro zone completed the fiscal and political union necessary to underpin economic and monetary union,” the wall Street Journal said.
Like other newspapers, the Wall Street Journal said that the main problems with Friday’s accord were that the austerity measures were not accompanied by plans for sustainable growth and that the allocated bailout funds were not sufficient. The editorial also pointed out that European leaders all had domestic agendas and their failure to compromise was tied to their attempts to make peace at home.
“Not enough for the scale and scope of the European crisis”
Mohammed el-Erian, the CEO of PIMCO—one of the world’s largest global investment firms— and former IMF official, agreed with the statements made by the editorial boards. In a recent blog entry for CBS, el-Erian said that Friday’s European compromise was “necessary, but not sufficient.”
“Yet another golden opportunity was insufficiently exploited by European policymakers,” el-Erian wrote for CBS.
While the accord and a meeting of the European Central bank “produced important results,” he said that “given the scale and scope of the European crisis, they are not enough.”
In el-Erian’s eyes, Euro zone problems won’t be resolved by fiscal austerity. This is especially true for the southern European countries that need serious growth to overcome their deficits. He also said that Britain’s refusal to take part in the new treaty is the first sign of danger. It alerts that European public opinion is not in favor of the sacrifices demanded by Euro zone reformers and indicates that Euro zone politicians may have real trouble getting their publics to accept these measures.
As a result, el-Erian said that international investors would be left watching and worrying about Europe.
Americans, for their part, are already eyeing the Euro zone apprehensively.

Financial Express

Kingfisher, Air India accounts unfrozen

Posted: Wednesday, Dec 14, 2011 at 1619 hrs IST
New Delhi: The government unfroze the bank accounts of debt-ridden Kingfisher Airlines and Air India after the two air carriers made part-payment of their service tax dues.
"As they (Kingfisher and Air India) have made part-payments of service tax dues, the department has lifted the freeze on their accounts," a top Finance Ministry official said.
The accounts were de-freezed yesterday, sources said.
Kingfisher has given a written "undertaking" that it will pay the remaining dues toward service tax by March 31, 2012.
The Vijay Mallya-promoted airline had paid about Rs 9 crore toward its service tax dues for the month of November, while the state-owned carrier paid Rs 8 crore.
Earlier this month, the Central Board of Excise and Customs (CBEC) had frozen 10 accounts of Kingfisher Airlines and 11 of Air India for allegedly defaulting on service tax payments, despite collecting the same from passengers.
On Monday, Mallya had met CBEC Chairman S K Goel and requested de-freezing of the airline's bank accounts. The department reportedly asked him to at least pay the dues for the month of November.
Goel had said the Mallya-promoted airlines owed about Rs 110 crore in service tax to the exchequer for the April-November period, while Air India had defaulted on the payment of Rs 310 crore.
On December 9, the government informed Parliament that banks have no plans to carry out a second round of debt restructuring for Kingfisher Airlines, which has outstanding loans worth around Rs 6,419 crore.

World Finance


Moody's downgrade South African debt rating

As Pravin Gordhan, the country's finance minister, tries to improve the state of the country's finances, Moody's downgrades South Africa
23 Nov 2011

The South African rand dropped sharply against the USD and bonds depreciated as Moody’s Investor Services announced its intention to reduce its outlook on the country’s sovereign debt rating. The rating agency cited growth and deficit concerns as reasons for the decision.

Moody’s reduced the outlook from ‘stable’; South African debt is rated as BBB+ by Standard & Poor’s, one level below that of Moody’s.

The rand, which had appreciated substantially in recent weeks, immediately dropped 1.5 percent in value and is currently trading at around 8.00 to the USD. This was the biggest drop in a single day since the beginning of November.

The yield on 13.5 percent government bonds, which are due in 2015, also increased 11 basis points and now stands at 6.5 percent. The yield on the $2bn worth of South African government bonds due in 2020 also increased by 1.86 percent (23 basis points). Higher interest rates on government bonds reflect the increased risk investors associate with them.

Moody’s decision to reduce its outlook on South Africa’s A3 rating on local currency and long-term currency debt is the result of fears that the country’s annual growth rate will be lower than initially estimated and that the country’s government will be unable to meet its commitment to cutting budget deficits, as a result of popular pressure.

On October 25, Pravin Gordhan, who is South Africa’s finance minister, announced that the budget deficit for the year ending March 31 would, in all likelihood, be 5.5 percent of the country’s GDP, compared to 4.6 percent of the previous year.

Gordhan is in a particularly difficult position, on the one hand he is attempting to keep the budget deficit as low as possible, but on the other he is facing enormous pressure from a range of groups that includes trade unions and the ANC youth league, to increase social spending and job creation.

A currency strategist based at Standard Bank Group Ltd, in Johannesburg, Nomvuyo Guma, said in a telephone interview with Bloomberg, “Lowering the outlook is generally a precursor to a credit downgrade, which would certainly be a risk to inflows into the bond market, You’ve already seen the reaction in the markets.”

The South African Government strongly disagrees with Moody’s decision and expressed ‘disappointment’, in an email statement issued by the National Treasury. The statement claimed that the two main reasons behind Moody’s decision were the global economic situation and that the country’s public revenue would increase the moment growth prospects improved.

A fixed-income analyst attached to Afrifocus Securities, Michael Grobler, speaking in Cape Town, said that the South African market’s “direction is influenced by the weakening of Italian bond yields.” He described the outlook cut by Moody’s as “a setback for the current bond rally.”

To what extent Moody’s decision would become a self-fulfilling prophecy, only time will tell. There is little doubt that a general aversion to developing country debt played a major role in the rating agency’s decision.

Global Finance (Magazine)

Emerging Markets Roundup: India
SLACKENING M&A MAY PICK UP AS MONETARY POLICY EASES

By Aaron Chaze

Corporate dealmaking in India has declined in the period of the year through October 2011.
According to global consulting firm Grant Thornton, domestic and cross-border mergers and acquisitions by Indian companies totaled $33.6 billion—down from $42.9 billion in announced deals during the same period in 2010. This is a 22% fall year-on-year.
The top five deals accounted for 79% of deal flow. However, private equity deals have continued to grow, reaching $7.2 billion to October 2011, compared to $4.9 billion over the same period last year—a growth of 47%. The manufacturing sector was the most active, followed by IT and healthcare.
Corporate dealmaking has been stymied by relatively high interest rates and the resultant high cost of finance, but that may soon change. The Reserve Bank of India (RBI) could start easing its tight monetary policy in December or January, according to the prime minister’s Economic Advisory Council, which noted in a recent release that inflation is likely to decline, and a reversal in monetary policy could follow. The Indian central bank has raised its policy interest rates 13 times in the past 20 months. The repo rate rose to 8.50% by October this year—from 5.0% in April 2010. Inflation rose to 9.72% in October from 8.87% a year earlier, though it eased slightly from 9.78% in September this year.
According to the Report on Internet in India 2011—published jointly by the Internet and Mobile Association of India and IMRB, an international market research and business consultancy, Internet penetration in India will grow to 121 million users by December 2011. In September the user base was estimated at 113 million and the report cites an annual growth rate of 13%. In smaller centers—with populations less than 500,000— Internet penetration is growing at the much faster pace of 60% annually.

Nikkei

Olympus Files Delayed Earnings, Avoids Delisting For Now

Wednesday, December 14, 2011

TOKYO (Dow Jones)--Olympus Corp. (7733) submitted long-delayed earnings results for the fiscal first half on Wednesday, meeting a critical deadline that would keep its shares listed for the immediate future.
But the Japanese maker of cameras and medical-imaging equipment still faces a precarious road ahead as police and regulators step up their investigations into its accounting scandal. If the Tokyo Stock Exchange deems fraudulent accounting had "a material impact," Olympus shares will eventually be delisted.
Olympus restated its figures for the past five years through March 2011, as well as its first quarter earnings for the current fiscal year, to account for more than $1.5 billion in investment losses it had been hiding using inflated payments for acquisitions.
The revision comes after a third-party panel commissioned by Olympus's board last week detailed a complex series of deals involving more than a dozen banks, funds and investment firms world-wide.
Among the revised figures, the company's net profit figure nearly halved for the last fiscal year, which ended in March, to Y3.87 billion from the previously-stated Y7.38 billion.
For the April to September quarter, the company booked a net loss of Y32.33 billion against a year-earlier profit of Y3.81 billion due mainly to one-time losses caused by market deterioration, Thai floods and a decline in the book value of its business assets.
The company also withdrew its full-year outlook, citing uncertainties over the impact of the scandal on its sales activities. Olympus had earlier projected a net profit of Y18 billion.
In a further sign of just how difficult it is to fully unravel Olympus's accounting scandal, KPMG Azsa LLC, the company's auditor until June 2009, attached a qualified opinion for the three years through March 2009. The company said it was unable to obtain sufficient audit evidence for the amount of assets managed by funds involved in the transactions.
A qualified opinion does not entail delisting from the Tokyo Stock Exchange.
Meanwhile, its successor as Olympus's auditor, Ernst & Young ShinNihon LLC, signed off for the two years through March 2011 without qualifications.
On Wednesday, Olympus shares dropped 4.1% to Y1,314 following a recent sharp rally on relief that the company steered clear of automatic delisting.
But the stock remains on the TSE's watch list as the bourse examines whether the fraudulent accounting "would have a material impact," a decision which will result in the shares being removed from the exchange.
Past examples showed that shares were delisted in cases when the false statements were significant enough that a company would fall into negative net worth after the revision or when there was evidence that the falsification was deliberate or widespread.
The exchange's decision on whether to keep the shares listed may also be affected by further developments in ongoing investigations on Olympus by authorities including Japanese police, prosecutors and securities regulators as well as the U.S. Federal Bureau of Investigation and the U.K. Serious Fraud Office.

martes, 13 de diciembre de 2011

ABI/ Inform

Canada: Canadian stocks market tumble amid flood of weak economic news

Asia News Monitor [Bangkok] 27 Nov 2011. 
Canadian stock market fell more than 200 points on Wednesday as commodity prices weakened amid growing about the European financial problem as well as the depressing economic data from both the U.S. and China.
The S&P/TSX Composite Index shed 223.48 points, or 1.89 percent, to close at 11571.71 after sliding more than 100 points earlier in the day. The S&P/TSX Venture Composite Index lost 32.77 points, or 2.11 percent, at 1522.15.
The mining and energy sectors led the main TSX index lower, down 4.1 and 3.17 percent respectively to hit the heavily-weighted material stock market as investors held growing fears on the forecast of decreasing market demand from the Europe.
The January oil contract fell 2.19 dollar to 95.82 U.S. dollar a barrel, Dec. gold was down 8.4 dollar to 1694.00 U.S. dollar an ounce. It closed below 1,700 dollars for the second time in a week after a sharp loss of 46.50 dollars on Monday.
On the Toronto Stock Exchange, the gold-heavy metals and mining group was down 4.10 percent with almost one-month biggest jump in the day. Goldcorp Inc. was the biggest decliner and its shares sharply lost 3.24 percent at 50.71 Canadian dollar and Barrick Gold Corp. lost 1.47 percent and closed down well above 50 Canadian dollar.
One of Germany's worst bond sales since the launch of the euro sparked concerns among investors that the debt crisis was even beginning to threaten Berlin. The Bundesbank was forced to buy 39 percent of the six billion euros of debt Germany had hoped to sell to investors after banks bought just 3.644 billion euros of the issue.
The German 10-year bonds yield surged 5.5 basis points to 1.964 percent while Italian and Spanish bond yields dipped after the European Central Bank has reported to intervene in the bond markets.
Germany's debt agency said that the shortfall in the sale reflected worsening market nerves and that it would buy back the retained amount to investors on secondary debt markets and that Germany would not face a funding shortage.
Adding to investor unease, a survey from financial information company Markit showed that the euro zone contracted for the third month running in Nov. and that the deteriorating economic picture is not just confined to Greece.
According to the survey, Markit suggested that the euro zone is contracting at a quarterly rate of 0.6 percent in the fourth quarter and that the problems are increasingly spreading to Europe' s two biggest economies, Germany and France.
Along with the disappointing grim European economic news, the poor data from China also strengthened their concerns over global growth.
A newly released report from HSBC showed that a Chinese manufacturing index slowed to 48 in November from 51 in October, which was the lowest data since March 2009.
China has been one of the few bright spots since the economic crisis of 2008 sent global economies into a slump and its strong economic growth has helped support higher commodity prices, which in turn have boosted resource stocks on the resource-heavy Toronto Stock Exchange.
The contraction in China and Europe sent the energy stocks down nearly 3 percent. Suncor Energy led the sector's retreat, sliding more than 4.64 percent to 29.01 Canadian dollar per share.
The financial sector fell 1.72 percent on Wednesday, pulling down the market even lower. A report said that some of Canada's largest financial institutions will be among those subjects to a new round of stress tests by the U.S. Federal Reserve to determine if major U.S. banks can withstand a downturn in the economy, among which the U.S. operations of Royal Bank of Canada and Bank of Montreal were included.
Royal Bank of Canada was off over 100 cents to 43.90 Canadian dollars and Bank of Montreal fell 8 cents to 56.20 Canadian dollars.
On the currency wise, as the intensifying euro zone debt crisis pushed up the safe-haven appeal of the U.S. dollar and oil and metals prices slid down, the Canadian dollar fell 0.95 cents to 95. 45 cents U.S. dollar on Wednesday. One U.S. dollar was buying 1.0476 Canadian dollars at 5 p.m. local time (22:00 GMT) on Wednesday compared with the 1.0381 Canadian dollars on Tuesday. - PNA

Expatica

Greece hosts creditors for bailout talks 

Economy | 12.12.2011

The Greek government has welcomed international auditors to Athens as crunch talks resume over a second financial lifeline, after austerity measures were passed by parliament.

Greece has launched a fresh round of bailout talks with international inspectors in an effort to secure a second rescue loan package agreed to several weeks ago, but which has not yet been finalized.
 Finance Minister Evangelos Venizelos met representatives of the European Union, the European Central Bank (ECB) and the International Monetary Fund (IMF) - collectively known as the "troika" - in Athens on Monday to negotiate further details of the deal, which is crucial to easing Greece's crushing debt burden.
"We begin this week in Athens with the troika two very important procedures to put into place a new loan decided in Brussels," said Venizelos.
An important component of the talks are the conditions for a write-off of Greek debt by 100 billion euros ($134 billion). Representatives of private investors, who will be asked to share part of the losses caused by the debt waiver, were set to attend talks, according to the news agency Reuters. 
Greece has only been able to avoid defaulting on its loans because of loans from the troika. The aim is for Greece to reduce its debt to 120 percent of gross domestic product by 2020. The current level stands at more than 160 percent.
Venizelos warned of "a hard battle ahead" under "very difficult conditions in Europe and the world."
An initial loan of 110 billion euros, spread over three years, was agreed by the troika for Athens in 2010. So far, Greece has received 73 billion euros of that money. The new loan package, of 130 billion euros, was agreed in October. Of this amount, 30 billion euros is to be used to recapitalize banks.

Tough domestic budget agreed

Last week, lawmakers in Greece passed a budget for 2012 committing Athens to tough fiscal goals to address the country's debt mountain of 350 billion euros.
Extra income is to be raised through an overhaul of the tax system, a reduction of tax breaks and minimum income thresholds. Reforms were also planned to the health and social security sectors, with a delayed asset sale set to proceed "at a faster pace."
The budget was agreed by the country's new caretaker government, led by former European Central Bank deputy chief Lucas Papademos, who replaced beleaguered predecessor George Papandreou last month.
On Friday, 26 out of 27 European Union leaders - Britain being the exception - appeared to back tighter budget policing in a desperate bid to save the eurozone by agreeing in principle to a new "fiscal compact."

Author: Richard Connor, Gregg Benzow (AFP, Reuters)
Editor: Martin Kuebler

Fortune

Sacconaghi: Apple's stock price reflects 'fantastically pessimistic assumptions'

December 13, 2011: 7:58 AM ET

Bernstein's top Apple analyst joins the chorus questioning the stock's dismal valuation
Last week, Morgan Stanley's Katy Huberty noted that Apple's (AAPL) current stock price suggests that the market is expecting the company's earnings to grow minus 2% in perpetuity.
In the first of a two-part series, Bernstein's Toni Sacconaghi on Monday drilled a little deeper into that -2% growth rate and found a series of what he calls "fantastically pessimistic assumptions." Keying in on the iPhone, Apple's single largest source of revenue, he wrote that for the company to grow -2% after 2012, either...
  • The iPhone would have to lose three-quarters of its market share over the next three years, with sales falling from an estimated 116 million units in 2012 to 45 million in 2015
  • Or Apple's gross margins would have to drop more than 1,000 basis points, from an estimated 41.3% in 2012 to 30.9% in 2015, while gross margins on the iPhone fell 2,000 basis points
"What makes Apple's valuation truly astonishing to us," Sacconaghi writes, "is that the iPhone and iPad -- which together drove 87% of its revenue growth and an estimated 91% of its profit growth last year -- are exposed to secular tailwinds."
In other words, the company is growing like gangbusters, not shrinking like its current P/E ratio would imply.

Benzinga

Pfizer Ups Dividend 10%, Announces $10B Share Buyback


By Gordon Wilcox

Dow component Pfizer (NYSE: PFE [FREE Stock Trend Analysis]), the largest U.S. pharmaceuticals company, said it is raising quarterly 10% to 22 cents a share from 20 cents. The company also announced a $10 billion share buyback plan.
The new dividend is payable March 6, 2012, to shareholders of record at the close of business on February 3, 2012.
The first-quarter 2012 cash dividend will be the 293rd consecutive quarterly dividend paid by Pfizer, the company said in a statement.
"While the dividend level remains a decision of the board, we continue to target a dividend payout ratio of approximately 40 percent by the end of 2013. In addition, we currently expect to repurchase approximately $5 billion of our common stock in 2012, with the remaining authorized amount available in 2013 and beyond," Pfizer CEO Ian Read said in the statement.

Finance News Network ( Australia )

Market Wrap: Aus shares down 1.4%

December 13, 2011 05:10 PM
The Aussie sharemarket closed 1.4 per cent lower, all sectors except consumer staples in the red as investors brace for possible mass downgrades of euro zone countries.
Today, the S&P/ASX 200 Index today lost 59 points to finish at 4,193. On the futures market, the SPI is 77 points lower.
Economic news
The Bureau of Statistics says business finance rose in October, but housing starts dropped sharply in the three months to the end of September.
Figures show total personal finance commitments rose 5.2 per cent in October. Total commercial finance was up 16.5 per cent, lease finance was down 2.4 per cent, and housing finance for owner occupation was down 1.2 per cent.
The ABS also says housing starts dropped 6.8 per cent in the third quarter. In the year to September, total dwelling commencements were down 11.5 per cent.
In other economic news the National Australia Bank says business conditions improved last month, while business confidence remained unchanged. The NAB’s business conditions index increased to one point during November, from a read of zero the month before. Business confidence came in at two points, below its long-term average.
Company news 
Orica Limited (ASX:ORI) says it’s producing ammonium nitrate at its Newcastle plant again. The chemical company has been cleared to restart three nitric acid plants and two ammonium nitrate plants on the Kooragang Island site, after the prevention notice issued after a leak in November was lifted last week. Shares in Orica Limited (ASX:ORI) closed 1.2 per cent lower at $25.47.
Rio Tinto Limited’s (ASX:RIO) confirmed an arbitrator upheld its claim against Ivanhoe Mines' poison pill, which was designed to stop Rio Tinto from creeping above its 49 per cent stake. It told Reuters it’s currently examining the decision, but can confirm an independent arbitrator has upheld its claim in respect of Ivanhoe Mines' Shareholder Rights Plan. Shares in Rio Tinto (ASX:RIO) closed 2.14 per cent lower today at $62.76.
Aquarius Platinum Limited (ASX:AQP) shares took a battering today, closing 8.76 per cent lower, after it announced its indirect 50 per cent subsidiary Mimosa Holdings signed a deed of trust incorporating the Zvishavane Community Share Ownership Trust in Zimbabwe. The beneficiaries will include communities surrounding the Mimosa mine.
Watpac Limited (ASX:WTP) says it’s expecting its full-year net profit to rise at least 20 per cent this year. The construction contracting group also today said it’s to commence a share buy-back program, to increase earnings per share and value to shareholders.
Lend Lease Limited (ASX:LLC) has a new chief financial officer. Tony Lombardo took the reigns from Brad Soller today, after four years as the company’s group head os strategy and mergers and acquisitions.
And Virgin Australia Holdings (ASX:VAH) and Singapore Airlines started their new alliance today, with services to Darwin from Singapore and Sydney. Singapore’s subsidiary SilkAir will fly four times a week from Singapore to Darwin, starting March, and Virgin will fly daily from Sydney to Darwin from April.
Sectors and stocks

All sectors were in the red, except for consumer staples, up 11 points to 7,621. The worst performing sector was energy, down 293 points, closing at 13,415.
The best performing stock in the S&P/ASX200 was Qube Logistics, it rose 2.87 per cent to close at $1.43.5 cents. Shares in Pacific Brands and Envestra also finished stronger today.
The worst performing stock was Aquarius as we saw earlier, it closed at $2.50, followed by Medusa and Aquila.
IPOs

Fairfax Media’s former Trade Me Group (ASX:TME) started trading on its own today, it listed at $2.70, opened at $2.20 and closed at $2.21.
Commodities

The price of gold is $US1,655.90 an ounce and Light crude is up six cents at $US97.83 a barrel.

United Nations

Food prices remain steady during November, UN agency reports

8 December 2011

Global food prices in November were virtually unchanged from October, and 10 per cent below their peak in February, the United Nations Food and Agriculture Organization (FAO) reported today.
FAO’s Food Price Index level was 215 points last month – just two points, or one per cent, above its level in November 2010, according to a news release issued by the Rome-based agency.
Cereal prices dropped by 3 points, or 1 per cent, from October. This is due largely to wheat prices, which dropped 3 per cent, while rice prices fell only slightly and coarse grain prices remained virtually unchanged.
Also a factor is the “significant upward revision” of the 2011/2012 global cereal supply estimate as a result of better crop prospects in some Asian countries and Russia, and larger than anticipated stocks in the latter.
Other factors include deteriorating world economic prospects and a strong United States dollar, according to the latest issue of FAO’s quarterly Crop Prospects and Food Situation report published today.
The report confirmed a record level of world cereal production of 2,323 million tonnes for 2011, which should be enough to cover the expected increase in demand in 2011/12 and also allow for a moderate replenishment of world reserves.
Global wheat output is expected to increase by 6.5 per cent, while the forecasts for coarse grains and rice were reduced slightly due to a downward adjustment for maize in the US and a deterioration of rice prospects in Indonesia.
The report focuses on developments affecting the food situation of developing countries and in particular low-income food-deficit countries (LIFDCs). It said that given their likely increased import requirements, the aggregate cereal import bill of the LIFDCs for 2011/2012 would reach a record level of $33 billion – up 3.4 per cent from 2010/2011.
It also pointed out that, despite some improvements in Somalia thanks to substantial humanitarian assistance and favourable rains, food insecurity is expected to remain “critical” in drought-affected areas until the harvest of short-season crops in early 2012. In the Horn of Africa as a whole, food insecurity remained critical for some 18 million people.
In several countries of the Sahel, including Burkina Faso, Chad, Mali, Mauritania and Niger, agricultural production has been hit by irregular rains and significant pest infestations, all of which could lead to price rises and food insecurity.
The report added that prolonged civil unrest in Syria and Yemen has disrupted trade and humanitarian aid distribution, limiting access to food, especially for vulnerable households.
According to FAO’s latest estimates, 33 countries around the world are in need of external assistance as a result of crop failures, conflict or insecurity, natural disasters and high domestic food prices.

CNBC

US Lawmakers Reach Tentative Deal to Fund Government

Published: Monday, 12 Dec 2011 | 9:54 PM
By: Reuters
U.S. lawmakers moved closer to a deal on Monday to fund the government through next year, potentially avoiding a shutdown that would have further damaged Congress' tattered reputation ahead of the 2012 election.
The group of Republican and Democratic lawmakers tentatively agreed on how to fund a wide range of government functions from homeland security to protecting the environment, congressional aides said.
Details were not immediately available and lawmakers were expected to publish the massive spending bill on Tuesday after hashing out remaining differences and assembling the legislation.
"There are still a couple of open items that need to be ironed out. These aren't deal breakers or game changers but are still important issues," said a Democratic spokesman for the appropriations committee in the House of Representatives.
A Republican aide said the group had a bipartisan, bicameral agreement in place on the entire spending package though noted that they still had to "make sure all our Is are dotted and our Ts are crossed."
The tentative deal comes after battles over how to trim the country's massive federal deficits brought the government to the brink of a shutdown and stripped the country of its top credit rating.
Congress has managed to pass bills to fund housing, agriculture, transportation and justice departments for the fiscal year ending Sept. 30, 2012.
But the rest of the government, including the health and education departments, are being funded by a temporary spending measure which expires Friday.
"Nobody wanted to have this thing drag out much longer than Friday," said Potomac Research policy analyst Greg Valliere.
As part of this summer's fight to raise the country's debt limit, lawmakers had agreed to cap discretionary spending at $1.043 trillion — a $6 billion reduction from last year's levels.
Regardless, Democratic lawmakers have been squabbling over Republican attempts to restrict funding for the Obama administration's health care act and consumer financial protection bureau, among other things.
The House of Representatives and the Senate must vote in favor of the spending bill in order to keep major parts of the government operating beyond Friday

Swissinfo

Rubik tax treaties face serious hurdle

Nov 25, 2011 - 13:33

by Matthew Allen, swissinfo.ch

Switzerland is facing defeat in its efforts to isolate European Union members with tax deals that guarantee client anonymity, according to one legal expert.

The European Commission has threatened to take Germany and Britain to court if they enforce the Swiss treaties. Swiss Finance Minister Eveline Widmer-Schlumpf cancelled a meeting with EC Tax Commissioner Algiridas Semeta scheduled for Friday.

The Swiss designed Rubik tax treaty system promises to weed out undeclared assets and hand over tax to other countries instead of the names of tax dodgers.

But it strikes a blow at the heart of the EU’s strategy to force Switzerland into an automatic exchange of information to assist tax evasion investigations.

Switzerland is opposed to such data transfer that would violate banking secrecy laws and give up a major advantage for its private banks.

In the last few months, Switzerland pulled off two major coups by persuading Germany and Britain to break ranks with the EU and sign Rubik deals. But political opposition in Germany and the threat of a legal challenge by the EU have put the treaties in doubt.

Future pitfalls

There are no legal issues with the retrospective element of Rubik system, that compels Swiss banks to pay back lost tax revenues, according to Thomas Cottier, professor of European and international economic law at the University of Bern.

But Britain and Germany appear to flout EU directives by agreeing to future payouts rather than the collection of client data.

“EU member states are entitled to deal with the past, but run into problems if they commit to excluding the free exchange of information in future,” Cottier told swissinfo.ch.

Cottier compared the threat to take Britain and Germany to the European Court of Justice (ECJ) to the fight between the EU and United States airlines over airspace treaties at the beginning of the Millennium.

Niche strategy test

The ECJ ruled in 2002 that airlines had to negotiate with the EU as a whole rather than individual member states to secure routes through European airspace. The ruling consigned eight bilateral air agreements between US airlines and EU member states to the trash can.

Cottier believes the bilateral tax agreements with Germany and Britain could go the same way. If that happens, it could challenge Switzerland’s “one foot in, one foot out” strategy of retaining sovereignty whilst signing up to selected bilateral EU treaties, he added.

“This case could show us the limits of Switzerland’s niche policy route,” he told swissinfo.ch. “It could become increasingly difficult for Switzerland to swim against the tide if its own way of conducting business hurts others.”

Switzerland is also locked in a long-running fight with the EU over its cantonal corporate tax system that gives tax breaks to the overseas earnings of international firms based in the country.

The legal threat could also scupper negotiations between Switzerland and Greece to set up a similar Rubik tax deal. Italy has also expressed an interest, but France this week officially closed the door on such a deal, saying it would conflict with its interest of tracking down and punishing tax dodgers.

Secrecy to stay

In a recent interview with Britain’s chartered institute of taxation, Dave Hartnett, Permanent Secretary for Tax at the British tax authority, said the Rubik deal represented a best case compromise.

“I don’t think it does let fraudsters off , because we weren’t going to catch them anyway,” the senior civil servant said in the interview. “We don’t think banking secrecy will disappear in Switzerland at any time in the foreseeable future, certainly not in the next 10 years.”

“So what we are doing is collecting back taxes from people who we couldn’t identify. And at a time when our nation has a deficit it seemed like a very sensible thing to be doing.”

Four out of five Britons with assets in Switzerland are believed to be tax dodgers, Hartnett added.

Although there appears to be little political opposition to the tax deal in Britain, unlike in Germany, the British tax authorities are not resting on their laurels.

Some 6,000 suspected tax cheats with assets at HSBC’s Geneva-based private banking operation are currently being sent letters demanding that they come clean or face sanctions. The recipients of these letters have been given 35 days to respond.

It is thought that the information of potential cheats was obtained from a stolen CD of Swiss banking data.

ABC News

Government pushes states to privatise power

  By Stephen Dziedzic

Updated December 13, 2011 21:14:09 

Energy Minister Martin Ferguson released the Government's draft energy white paper, which warns that the power industry needs massive investment if it is to meet growing demand.
Power prices have jumped by up to 40 per cent over the past three years, prompting angry newspaper headlines and stoking popular anger at state governments.
Mr Ferguson says it is short-sighted to blame the states but says continued government ownership of electricity generation assets makes it more difficult to attract new investment.
"Peak demand is having a huge impact on the cost of electricity in Australia," he said.
"These are the issues that confront all of us. I'm not seeking to apportion blame or to put pressure on state and territory governments or whatever.
"I will stand side by side with them in defending the current increases in prices."
But he says price regulation by state and territory governments can reduce competition and innovation so electricity markets should be opened up.
The draft white paper says power infrastructure is ageing while demand is rising and Australia will need to spend about $240 billion in the generation, transmission and distribution of gas and electricity over the next two decades.
The debate over power privatisation has caused enormous upheaval and controversy, particularly in New South Wales, but Mr Ferguson says the states should bite the bullet and sell off their assets.
"The results in Victoria speak for themselves. They actually see the comparative price increases from year to year, which we now release publicly on a regular basis," he said.
"There is considerable pressure on governments of all state and political persuasions at the moment to be having a hard look at the drivers of increased electricity prices. These increases are not going to go away."
Clare Savage from the Energy Supply Association of Australia says it is a welcome intervention in the debate and she hopes the states take notice.
"From our perspective competition between retailers in a market is the best way to ensure that you get the lowest possible prices for both households and businesses," she said.

States uncertain

But at least three states are not convinced it is a good idea.
Queensland Energy Minister Stephen Robertson says just because privatisation has worked in Victoria does not mean it will work for his state.
"Queensland is still significantly below the electricity prices paid in Victoria so if that is what the Federal Government is hanging their hat on as a compelling argument to privatise energy-generating assets then that's a curious way of going about it," he said.
WA Energy Minister Peter Collier also says his state is unlikely to follow Victoria's lead.
"The WA Government is not considering privatising any of its assets at the moment. What we have at the moment is a situation where we have significant private sector investment in generation particularly over the past few years but that has come at a cost," he said.
In Tasmania, Infrastructure Minister David O'Byrne is waiting for a report from the independent expert panel reviewing the state's energy sector before making a decision.
"We're obviously not going to second guess what that review will come up with. Once that report is finalised by the panel, it will obviously then be put out into the public arena and we'll discuss it," he said.
"But until we've completed our work we'll be focussed very much on ensuring that we provide the best structure of energy provision to the Tasmanian community."

Nuclear option

The draft white paper also notes that the carbon tax may pose additional challenges to the energy sector because it will take time and money to introduce renewable sources of energy.
It says the "lack of bipartisanship" around carbon pricing policy, referring to the rancorous political debate on the carbon tax, is also a significant concern to investors and the industry.
Mr Ferguson also announced the Government will no longer apply some emissions standards for new coal power stations because the carbon tax makes them redundant.
Prime Minister Julia Gillard has consistently said the Government would not embrace nuclear power, but Mr Ferguson continues to argue Australia may one day need to consider it.
"Nuclear for Australia is always there as an option. We don't have to invest in research and development and innovation on that front, other nations are the specialists," he said.
Greens senator Christine Milne says she is not surprised but is disappointed by Mr Ferguson's stance.
She says the white paper focuses too much on coal and gas and not enough on renewables.
"Martin Ferguson is a big supporter of nuclear, he's the one who's pushed the ALP to change its policy on uranium exports to India," she said.
"He keeps saying that if renewable energy was to fail then we'd need nuclear and we need to make that decision in the coming decade, but the fact of the matter is he talks down renewables at every turn."